27th Feb 2019 08:28
LONDON (Alliance News) - Weir Group PLC on Wednesday reported a significant drop in annual profit due to, in part, a write down on the value of its to-be-sold Flow Control arm.
Weir's main Minerals business did well, it said, with the outlook positive, but it has warned on profitability going ahead in Oil & Gas.
On an adjusted basis, from continuing operations, Weir's pretax profit rose 22%, and 26% in constant currency, to GBP310.1 million in 2018.
However, statutory pretax profit from continuing operations fell to GBP86.1 million from GBP198.6 million a year prior.
Weir booked GBP224.0 million of exceptional items and intangibles amortisation for 2018, it said, compared to just GBP56.3 million the year prior.
Some of Weir's exceptional costs included costs related to its ESCO Corp acquisition, restructuring, as well as a GBP45.0 million reduction in the value of its Flow Control business.
Weir completed the USD1.29 billion ESCO deal in July, saying at the time it still planned to sell Flow Control and focus on its main minerals and oil & gas operations.
On Monday, Weir announced GBP275 million deal with private equity firm First Reserve to sell Flow Control.
Weir's revenue increased by 23%, or 28% at constant currency, to GBP2.45 billion, with like-for-like growth at 15%.
Segmentally, Minerals revenue rose 13% at constant currency to GBP1.42 billion, with operating profit rising 14% to GBP250 million. In Oil & Gas, operating profit rose 8% constant currency to GBP96 million and revenue by 19% to GBP781 million.
The outlook for Minerals is positive, Weir said, with miners set to increase capital expenditure in 2019, while in Oil & Gas things are less clear with operations set to approach 2019 cautiously due to oil price volatility.
As a result, Weir expects 2019 revenue to fall and operating profit between GBP55 million and GBP95 million.
Weir is paying a 30.45 pence final dividend, taking the total for 2018 to 46.2p, 5% higher than what it paid in 2017.
"The last year has been transformational for the Group. With ESCO, we completed our largest ever acquisition while also agreeing the sale of the Flow Control division," said Chief Executive Jon Stanton.
"Looking to the full year, we currently expect our mining and infrastructure markets to continue to benefit from positive industry fundamentals with oil and gas activity to improve modestly from current levels," he added.
"Overall, assuming market and macro-economic conditions remain supportive, we anticipate the group will deliver another year of good constant currency revenue and profit growth, supported by strong execution of our We are Weir strategy."
Weir shares were up 0.8% on Wednesday early on at 1,610.46p each.
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